Putnam
Asia Pacific
Growth
Fund
SEMIANNUAL REPORT ON PERFORMANCE AND OUTLOOK
3-31-02
[SCALE LOGO OMITTED]
FROM THE TRUSTEES
[GRAPHIC OMITTED: PHOTO OF JOHN A. HILL AND GEORGE PUTNAM III]
Dear Fellow Shareholder:
World economies showed a surprising resilience in the aftermath of the
September 11 terrorist attacks. Recovery of the Asian economies, in
particular, propelled the performance of Putnam Asia Pacific Growth
Fund into positive territory for the semiannual period ended March 31,
2002. On the following pages your management team's report discusses the
factors that have been driving your fund's performance.
This economic climate, however, has given Putnam pause, and after a
number of lengthy working sessions between Management and the Board of
Trustees, your Trustees have agreed to recommend the mergers of several
funds. The intent of these mergers is to create more focused products
that will play a consistent role in any investment plan. It has been
proposed to merge Putnam Asia Pacific Growth Fund into Putnam
International Growth Fund, which has a similar investment objective.
More details of the proposed merger are listed on page 7.
As you read this report you may notice that we are now listing the name
of the team that manages your fund. We do this to reflect more
accurately how your fund is managed as well as Putnam's firm belief in
the value of team management. The individuals who comprise the team are
shown at the end of Management's discussion of performance.
We know that Putnam values its relationship with you and its other
shareholders and appreciates your loyalty during these times of
restructuring of staff and products in the pursuit of superior
investment performance in the future.
Respectfully yours,
/S/ JOHN A. HILL /S/ GEORGE PUTNAM, III
John A. Hill George Putnam, III
Chairman of the Trustees President of the Funds
May 8, 2002
REPORT FROM FUND MANAGEMENT
This fund is managed by the Putnam International Core Team
When we last wrote to shareholders at the end of September 2001, it
seemed as if the conditions for business in Asia and the Pacific Basin
could not get much worse. Economic growth was slowing in much of East
Asia. Japan, the region's largest economy, was slumping, as was demand
for Asian exports in Europe and the United States. Furthermore, the
September terrorist attacks in the United States had created new
political and economic uncertainties. However, the most pessimistic
expectations did not come to pass. Asian markets, along with the United
States, have already experienced resurgence, caused in part by positive
internal conditions as well as an improving global outlook. Putnam Asia
Pacific Growth Fund, completing the first half of its 2002 fiscal year
on March 31, 2002, registered a strong positive gain. Thanks to careful
stock selection and our top-down decisions to favor strong markets, the
fund outperformed its benchmark, the MSCI Pacific Index. However, it
underperformed the average for its Lipper Pacific region category during
the period because of the fund's relatively large exposure to Japanese
equities. Although we were underweighted in Japanese equities relative
to the benchmark index, other funds in the Lipper group had even less
exposure to Japan. Although the Japanese market advanced during the
period it underperformed other Asian markets.
Total return for 6 months ended 3/31/02
Class A Class B Class C Class M
NAV POP NAV CDSC NAV CDSC NAV POP
- -----------------------------------------------------------------------
14.06% 7.48% 13.46% 8.46% 13.49% 12.49% 13.66% 9.73%
- -----------------------------------------------------------------------
Past performance does not indicate future results. Performance
information for longer periods and explanation of performance
calculation methods begin on page 8.
[GRAPHIC OMITTED: horizontal bar chart TOP COUNTRY ALLOCATIONS]
TOP COUNTRY ALLOCATIONS*
Japan 56.5%
Australia 15.9%
South Korea 9.1%
Hong Kong 7.4%
Singapore 4.5%
Footnote reads:
*Based on net assets as of 3/31/02. Holdings will vary over time.
* SOUTH KOREA STANDS OUT IN REGIONAL RECOVERY
Several positive trends helped Asian equities appreciate. A global
recovery in confidence after September's uncertainties helped equities
in general. Markets looked forward to stronger activity in the global
economy and Asia benefited disproportionately because much of the
world's manufacturing capacity is located in the region. Many Asian
companies and markets also demonstrated fundamental strength and secular
improvement. We believe this was the basis of the fund's advance since
we focus chiefly on identifying growing companies priced below their
worth. In addition to carefully researched stock selection, we also make
top-down decisions to favor markets or sectors.
South Korea was Asia's leading market during the period, and your fund
was overweighted in that country relative to its benchmark. We believe
South Korean stocks were, and still are, priced attractively because of
their emerging-market status. However, as a high-quality emerging
market, one in which the government and corporations have undertaken
extensive and substantive reforms in recent years, South Korea attracted
a growing number of investors during the period. Samsung Electronics was
our top holding in South Korea. Samsung has had successes in gaining
market share with new products. It is expanding its share of the global
market for wireless telephone handsets at the expense of smaller
providers. As a major electronics supplier, Samsung is now the top
producer of both liquid-crystal displays (LCDs) and dynamic random
access memory (DRAM) chips. Prices for both products rose during the
period.
"Many Asian economies have started to turn the corner, after the sudden
downturn most experienced last year."
- -- Economist.com, April 12, 2002
Another holding in South Korea, Hyundai Motors, also did well by
broadening its product line after taking a 35% ownership position in
rival Kia. Hyundai now controls 70% of the Korean automobile market and
offers products ranging from inexpensive cars to luxury cars and SUVs.
Although these holdings, as well as others mentioned in this report,
were viewed favorably at the end of the reporting period, all are
subject to review and adjustment in accordance with the fund's
strategy.
Fund Profile
Putnam Asia Pacific Growth Fund seeks to provide capital appreciation by
investing primarily in common stocks of companies located in Asia and
the Pacific Basin. The fund targets growing large and midsize companies
with stocks priced below their worth. The fund is suitable for investors
seeking capital appreciation and willing to accept the risks of
investing in potentially volatile international markets.
We maintained an overweight position in Australia, which escaped the
2001 slowdown that gripped the rest of the world. The Conservative
government of John Howard has managed the economy well and the
undervalued Australian dollar has encouraged exports and investment. The
market is also attractive because of the high quality of corporate
management at many companies. We favored stocks of banks, such as
Westpac Banking Corp. and National Australia Bank, Ltd., which we
consider undervalued.
The fund also benefited from positions in two Singapore banks,
Overseas-Chinese Banking Corp. and United Overseas Bank. The Singapore
banking industry has consolidated since the 1997-98 financial crisis.
Five major banks have been reduced to three, which has eased price
competition and is allowing the banks to cut costs and increase profit
margins. Of the three remaining banks, we believe the two banks the fund
owns are in the best financial condition and their stocks performed
well during the period.
* RALLY LIFTED DEPRESSED SECTORS
As optimism returned to markets during the period, stocks that had been
out of favor rallied, particularly in the depressed technology sector.
In Taiwan, your fund owns two semiconductor manufacturers -- Taiwan
Semiconductor and United Microelectronics -- that appreciated as
semiconductor prices firmed after declining for many quarters. In Japan,
the fund owns Rohm Company and Murata Manufacturing Company, which make
a variety of components for computer and communication devices. Both
companies performed well due to an improving outlook for sales.
[GRAPHIC OMITTED: TOP 10 HOLDINGS]
TOP 10 HOLDINGS
Toyota Motor Corp.
Japan
Automotive
Samsung Electronics Company, Ltd.
South Korea
Electronics
NTT DoCoMo, Inc.
Japan
Telecommunications
Sony Corp.
Japan
Consumer cyclicals
Canon, Inc.
Japan
Office equipment and supplies
KAO Corp.
Japan
Consumer goods
Takeda Chemical Industries, Ltd.
Japan
Pharmaceuticals
BHP Billiton, Ltd.
Australia
Metals
United Overseas Bank, Ltd.
Singapore
Banking
Orix Corp.
Japan
Investment banking/brokerage
Footnote reads:
These holdings represent 26.5% of the fund's net assets as of 3/31/02.
Portfolio holdings will vary over time.
Telecommunications stocks also had positive results. We believe that in
this sector, Asian telecom companies might be the most attractive in the
world. Consumer demand is strong for advanced wireless services and
Asian telecom companies generally are not squeezed by high debt and
unrelenting price competition, as is the case in Europe and the United
States. In Japan, the fund owns NTT DoCoMo; in Hong Kong, it owns China
Mobile; and in South Korea, it owns SK Telecom.
* FUND STEERED DIFFICULT COURSE IN JAPAN
In Japan, Asia's largest market, many companies still are not focused on
earning profits for shareholders. Government policy-makers have also not
put in place reforms that could clear the way for growth, such as a
solution to the burden of non-performing loans in the banking sector.
We modified our strategy for this market at several points. Although we
maintained an underweight relative to our benchmark index, early in the
period we increased our exposure as we identified many Japanese stocks
that were undervalued following the market sell-off that accompanied the
September 11 tragedies. Generally speaking, our stock selections did
well because we favored export-oriented consumer cyclical companies. We
owned three major auto manufacturers, Toyota, Honda, and Nissan, as well
as Sony. The car companies launched successful incentive programs late
in 2001, achieving a jump in sales in North America. Sony has had
generally strong sales of its games and software in recent months.
Elsewhere in the consumer sector, stocks exposed to the domestic economy
fared worse. Kao, a large consumer products company similar to Procter &
Gamble in the United States, had poor results. Fast Retailing, a company
that is similar to the Gap in the United States, had disappointing
sales. In the two previous years it had sold large amounts of fleece
sweaters, but changing fashions and a warm winter depressed sales. Also,
within the financial sector, we favored consumer finance and insurance
companies after reducing our exposure to the few Japanese banks owned by
the fund when their fundamentals deteriorated early in the period. This
decision was generally beneficial because banking stocks were weak for
several months, although they rallied in March, the end of their fiscal
year.
We have become more pessimistic about Japan primarily because of the
failure of reform efforts. In February, prime minister Koizumi fired the
foreign minister Makiko Tanaka, an advocate of reform and the
highest-ranking woman in Japan's male-dominated government. While
economic policy was not at issue, the stock market fell because the
decision indicated Mr. Koizumi's capitulation to conservative factions
of the ruling Liberal Democratic Party, the same figures who have been
obstructing needed financial and economic reforms. Following this
decision, Mr. Koizumi's popularity was cut in half, leaving him
politically weaker. In short, Japan appears likely to undertake reform
in a painfully slow and incremental process, rather than taking bold
measures that could bring about a faster turnaround.
* MARKETS MAY CALM AFTER RECENT GAINS
We view the prospects for Asia as a whole more positively than the
prospects for Japan. Relative to its performance benchmark, the fund is
underweighted in Japanese and Hong Kong equities. Hong Kong is steadily
losing its manufacturing businesses to the rest of China where labor is
cheaper. We anticipate that the global economy is likely to continue its
recovery and should support business conditions in Asia, but the pace of
expansion might subside in the second half of the year. In terms of
sectors, we believe the fund remains well balanced. We have taken some
profits on cyclical stocks after their initial move in the upswing.
Sectors that underperformed in the recent period, such as consumer
staples, are still well represented in the portfolio because they offer
defensive qualities such as attractive valuations. We continue to favor
South Korea and Australia. The latter is the only market in the region
that has had stronger economic growth than the United States in the past
10 years. These markets offer what the fund targets -- the most
attractively valued globally competitive companies in Asia.
The views expressed here are exclusively those of Putnam Management.
They are not meant as investment advice. Although the described holdings
were viewed favorably as of 3/31/02, there is no guarantee the fund will
continue to hold these securities in the future. International investing
involves certain risks, such as currency fluctuations, economic
instability, and political developments. Funds investing in a single
region may be subject to more volatility than funds investing in a
diverse group of regions.
This fund is managed by the Putnam International Core Team. The members
of this team are Omid Kamshad, Joshua Byrne, Simon Davis, Peter Grant,
Pamela Holding, Nicholas Melhuish, Stephen Oler, Carmel Peters, and
George Stairs.
A NOTE ABOUT DUPLICATE MAILINGS
In response to investors' requests, the SEC has modified mailing
regulations for proxy statements, semiannual and annual reports, and
prospectuses. Putnam is now able to send a single copy of these materials
to customers who share the same address. This change will automatically
apply to all shareholders except those who notify us. If you would prefer
to receive your own copy, please call Putnam at 1-800-225-1581.
MERGER PROPOSED FOR PUTNAM ASIA PACIFIC GROWTH FUND
After careful study and lengthy working sessions with Putnam Investment
Management, your fund's trustees have agreed to recommend the merger of
Putnam Asia Pacific Growth Fund into Putnam International Growth Fund.
Completion of the merger is subject to a number of conditions, including
the approval of shareholders. Proxy materials will be delivered within
the next few months so you can submit your vote.
Putnam International Growth Fund does not concentrate its investments in
any particular geographic region but it does provide exposure to stock
markets in Asia and the Pacific Basin and is more broadly diversified.
If the merger is approved, shareholders are expected to benefit from
potentially lower expenses provided by the larger asset base of the
merged funds. We encourage you to vote on this important matter by
returning your completed proxy material.
Once a registration statement relating to a merger has been filed with
the SEC and is effective, you may call 1-800-225-1581 or visit
www.sec.gov for a free copy of the prospectus/proxy statement. Please
read this important information carefully.
NEW REPORT COVER REFLECTS "BLEND" INVESTMENT STYLE
You may have noticed that the color of this report has changed. Its new
color -- blue -- indicates that your fund is managed in what we now
refer to as the "blend" investment style. Your fund, like other blend
funds, has always had the flexibility to invest in both growth stocks
(those of companies with strong potential for above-average growth) and
value stocks (those of well-established businesses that are priced
attractively). Blend funds search for companies whose long-term business
worth is believed to be more than their current stock prices indicate.
The blend approach makes it possible for your fund to perform regardless
of whether growth stocks or value stocks are in favor.
PERFORMANCE SUMMARY
This section provides information about your fund's performance, which
should always be considered in light of its investment strategy.
TOTAL RETURN FOR PERIODS ENDED 3/31/02
Class A Class B Class C Class M
(inception dates) (2/20/91) (6/1/93) (7/26/99) (2/1/95)
NAV POP NAV CDSC NAV CDSC NAV POP
- ------------------------------------------------------------------------------
6 months 14.06% 7.48% 13.46% 8.46% 13.49% 12.49% 13.66% 9.73%
- ------------------------------------------------------------------------------
1 year -7.89 -13.18 -8.77 -13.33 -8.82 -9.73 -8.54 -11.74
- ------------------------------------------------------------------------------
5 years -21.89 -26.38 -24.86 -26.19 -24.86 -24.86 -23.93 -26.58
Annual average -4.82 -5.94 -5.56 -5.89 -5.56 -5.56 -5.32 -5.99
- ------------------------------------------------------------------------------
10 years 42.69 34.52 32.22 32.22 32.07 32.07 35.32 30.61
Annual average 3.62 3.01 2.83 2.83 2.82 2.82 3.07 2.71
- ------------------------------------------------------------------------------
Annual average
(life of fund) 2.49 1.95 1.69 1.69 1.71 1.71 1.93 1.60
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COMPARATIVE INDEX RETURNS FOR PERIODS ENDED 3/31/02
MSCI Pacific Consumer
Index price index
- ------------------------------------------------------------------------------
6 months 1.54% 0.22%
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1 year -16.12 1.30
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5 years -24.41 11.62
Annual average -5.44 2.22
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10 years -1.20 28.21
Annual average -0.12 2.52
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Annual average
(life of fund) -2.35 2.57
- ------------------------------------------------------------------------------
Past performance does not indicate future results. More recent returns
may be less or more than those shown. Investment return and principal
value will fluctuate and you may have a gain or a loss when you sell
your shares.
Performance assumes reinvestment of distributions and does not account
for taxes. Returns at public offering price (POP) for class A and M
shares reflect a sales charge of 5.75% and 3.50%, respectively. Class B
share returns reflect the applicable contingent deferred sales charge
(CDSC), which is 5% in the first year, declining to 1% in the sixth
year, and is eliminated thereafter. Class C shares reflect a 1% CDSC the
first year that is eliminated thereafter. Performance for class B, C,
and M shares before their inception are derived from the historical
performance of class A shares, adjusted for the applicable sales charge
(or CDSC) and higher operating expenses for such shares. All returns
assume reinvestment of distributions at NAV. Investment return and
principal value will fluctuate so that an investor's shares when
redeemed may be worth more or less than their original cost. The fund's
performance data reflect an expense limitation previously in effect.
Without the expense limitation, total returns would have been lower.
A 1% redemption fee on total assets redeemed or exchanged within 90 days
of purchase will be imposed.
PRICE AND DISTRIBUTION INFORMATION* 6 MONTHS ENDED 3/31/02
Class A Class B Class C Class M
- ------------------------------------------------------------------------------
Share value: NAV POP NAV NAV NAV POP
- ------------------------------------------------------------------------------
9/30/01 $7.68 $8.15 $7.43 $7.56 $7.54 $7.81
- ------------------------------------------------------------------------------
3/31/02 8.76 9.29 8.43 8.58 8.57 8.88
- ------------------------------------------------------------------------------
*The fund had no distributions during the period.
TERMS AND DEFINITIONS
Total return shows how the value of the fund's shares changed over time,
assuming you held the shares through the entire period and reinvested
all distributions in the fund.
Net asset value (NAV) is the price, or value, of one share of a mutual
fund, without a sales charge. NAVs fluctuate with market conditions. The
NAV is calculated by dividing the net value of all the fund's assets by
the number of outstanding shares.
Public offering price (POP) is the price of a mutual fund share plus the
maximum sales charge levied at the time of purchase. POP performance
figures shown here assume the 5.75% maximum sales charge for class A
shares and 3.50% for class M shares.
Contingent deferred sales charge (CDSC) is a charge applied at the time
of the redemption of class B or C shares and assumes redemption at the
end of the period. Your fund's class B CDSC declines from a 5% maximum
during the first year to 1% during the sixth year. After the sixth year,
the CDSC no longer applies. The CDSC for class C shares is 1% for one
year after purchase.
Class A shares are generally subject to an initial sales charge and no
sales charge on redemption (except on certain redemptions of shares
bought without an initial sales charge).
Class B shares may be subject to a sales charge upon redemption.
Class C shares are not subject to an initial sales charge and are
subject to a contingent deferred sales charge only if the shares are
redeemed during the first year.
Class M shares have a lower initial sales charge and a higher 12b-1 fee
than class A shares and no sales charge on redemption (except on certain
redemptions of shares bought without an initial sales charge).
COMPARATIVE BENCHMARKS
Morgan Stanley Capital International (MSCI) Pacific Index is an
unmanaged index of securities from five Asian countries. Indexes assume
reinvestment of all distributions and do not account for fees.
Securities and performance of a fund and an index will differ. You
cannot invest directly in an index.
Consumer price index (CPI) is a commonly used measure of inflation; it
does not represent an investment return.
Lipper Inc. is a third-party industry ranking entity that ranks funds
(without sales charges) with similar current investment styles or
objectives as determined by Lipper.
A GUIDE TO THE FINANCIAL STATEMENTS
These sections of the report, as well as the accompanying Notes,
constitute the fund's financial statements.
The fund's portfolio lists all the fund's investments and their values
as of the last day of the reporting period. Holdings are organized by
asset type and industry sector, country, or state to show areas of
concentration and diversification.
Statement of assets and liabilities shows how the fund's net assets and
share price are determined. All investment and noninvestment assets are
added together. Any unpaid expenses and other liabilities are
subtracted from this total. The result is divided by the number of
shares to determine the net asset value per share, which is calculated
separately for each class of shares. (For funds with preferred shares,
the amount subtracted from total assets includes the net assets
allocated to remarketed preferred shares.)
Statement of operations shows the fund's net investment gain or loss.
This is done by first adding up all the fund's earnings -- from
dividends and interest income -- and subtracting its operating expenses
to determine net investment income (or loss). Then, any net gain or
loss the fund realized on the sales of its holdings -- as well as any
unrealized gains or losses over the period -- is added to or subtracted
from the net investment result to determine the fund's net gain or loss
for the fiscal period.
Statement of changes in net assets shows how the fund's net assets were
affected by distributions to shareholders and by changes in the number
of the fund's shares. It lists distributions and their sources (net
investment income or realized capital gains) over the current reporting
period and the most recent fiscal year-end. The distributions listed
here may not match the sources listed in the Statement of operations
because the distributions are determined on a tax basis and may be paid
in a different period from the one in which they were earned.
Financial highlights provide an overview of the fund's investment results,
per-share distributions, expense ratios, net investment income ratios, and
portfolio turnover in one summary table, reflecting the five most recent
reporting periods. In a semiannual report, the highlight table also
includes the current reporting period. For open-end funds, a separate table
is provided for each share class.
THE FUND'S PORTFOLIO
March 31, 2002 (Unaudited)
COMMON STOCKS (97.7%) (a)
NUMBER OF SHARES VALUE
Australia (15.9%)
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326,066 AMP, Ltd. $ 3,305,788
113,200 Australia & New Zealand Banking Group, Ltd. 1,073,371
660,178 BHP Billiton, Ltd. 4,015,889
364,432 Brambles Industries, Ltd. 1,847,379
158,802 Commonwealth Bank of Australia 2,714,965
601,579 Foster's Brewing Group, Ltd. 1,486,242
152,711 National Australia Bank, Ltd. 2,784,397
239,982 News Corporation, Ltd. (The) 1,680,074
90,693 News Corporation, Ltd. (The) ADR 2,573,867
641,900 Qantas Airways, Ltd. 1,537,905
372,934 Telstra Corporation, Ltd. 1,070,607
400,434 Westpac Banking Corp. 3,335,413
114,233 Woodside Petroleum, Ltd. 895,425
345,470 Woolworths, Ltd. 2,300,598
-------------
30,621,920
China (0.5%)
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4,080,000 Aluminum Corporation of China, Ltd. (NON) 920,663
Hong Kong (7.4%)
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272,000 Cheung Kong Holdings, Ltd. 2,432,432
273,100 China Mobile, Ltd. (NON) 843,852
385,300 CLP Holdings, Ltd. 1,580,799
1,181,500 CNOOC, Ltd. 1,469,377
928,900 Hong Kong and China Gas Company, Ltd. 1,292,190
394,000 Hong Kong Electric Holdings, Ltd. 1,490,205
181,300 Hutchison Whampoa, Ltd. 1,598,079
654,000 Li & Fung, Ltd. 1,043,938
146,000 Sun Hung Kai Properties, Ltd. 1,109,095
241,500 Swire Pacific, Ltd. 1,306,644
-------------
14,166,611
Japan (56.0%)
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23,900 Acom Company, Ltd. 1,446,517
11,300 Acom Company, Ltd. 144A 683,918
17,000 Advantest Corp. 1,276,507
126,000 Asahi Chemical Industry Company, Ltd. 407,924
130,000 Canon, Inc. 4,826,806
70,500 Denso Corp. 1,069,391
452 East Japan Railway Co. 1,899,962
51,600 Fast Retailing Company, Ltd. 1,285,035
76,000 Fuji Photo Film Companies, Ltd. 2,391,669
100 Fujisawa Pharmaceutical Co. 2,196
9,500 Hirose Electric Company, Ltd. 663,874
72,100 Honda Motor Company, Ltd. 3,030,692
635 Japan Telecom Company, Ltd. 1,964,757
111 Japan Tobacco, Inc. 672,651
221,000 KAO Corp. 4,119,463
700 Kinden Corp. 2,721
228,000 Kirin Brewery Company, Ltd. 1,550,283
212,000 Konica Corp. 1,340,699
46,000 Kyorin Pharmaceutical Company, Ltd. 1,114,331
265,000 Matsushita Electric Industrial Co. 3,231,756
230,000 Matsushita Electric Works, Ltd. 1,753,075
290,000 Mitsui Sumitomo Insurance Company, Ltd. 1,363,444
33,200 Murata Manufacturing Company, Ltd. 2,129,651
348,000 Nikko Securities Company, Ltd. 1,536,337
15,100 Nintendo Company, Ltd. 2,222,096
303,000 Nissan Motor Company, Ltd. 2,190,582
74,000 Nissin Food Products Company, Ltd. 1,351,445
208,000 Nomura Securities Company, Ltd. 2,698,302
2,155 NTT DoCoMo, Inc. 5,854,652
885 NTT DoCoMo, Inc. 144A 2,404,347
10,900 Obic Company, Ltd. 2,060,561
111,000 Olympus Optical Company, Ltd. 1,382,160
800 OMRON Corp. 11,477
44,800 Orix Corp. 3,360,592
6,000 Promise Company, Ltd. 257,641
7,400 Promise Company, Ltd. 144A 317,757
95,000 RICOH Company, Ltd. 1,760,056
19,200 Rohm Company, Ltd. 2,883,405
53,800 Sankyo Company, Ltd. 822,164
82,600 SEGA Corp. (NON) 1,471,104
96,000 Seven-Eleven Japan Company, Ltd. 2,984,831
51,400 Shin-Etsu Chemical Co. 2,176,092
101,000 Sony Corp. 5,251,604
260,000 Sumitomo Chemical Company, Ltd. 981,058
600 Sumitomo Mitsui Banking Corp. 2,499
108,000 Taisho Pharmaceutical Company, Ltd. 1,634,141
101,000 Takeda Chemical Industries, Ltd. 4,093,050
18,340 Takefuji Corp. 1,123,846
172,000 Tokio Marine & Fire Insurance Company, Ltd. (The) 1,235,113
67,400 Tokyo Electric Power Co. 1,276,689
657,000 Tokyo Gas Company, Ltd. 1,591,555
178,000 Toppan Printing Company, Ltd. 1,673,745
135,000 Tostem Inax Holding Corp. 1,757,415
336,100 Toyota Motor Corp. 9,689,095
20,500 Yamada Denki Company, Ltd. 1,396,989
-------------
107,679,722
Singapore (4.5%)
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48,000 Flextronics International, Ltd. (NON) 876,000
121,000 Overseas-Chinese Banking Corp. 905,777
114,000 Singapore Airlines, Ltd. 890,480
115,000 Singapore Press Holdings, Ltd. 1,534,581
408,000 United Overseas Bank, Ltd. 3,364,036
115,500 Venture Manufacturing, Ltd. 1,140,277
-------------
8,711,151
South Korea (9.1%)
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31,800 Hyundai Motor Company, Ltd. 982,665
43,112 Kookmin Bank 1,803,374
69,150 Korea Electric Power Corp. 1,344,641
82,463 Korea Telecom Corp. ADR 1,977,463
14,170 Korea Tobacco & Ginseng Corp. 187,431
148,100 Korea Tobacco & Ginseng Corp. 144A GDR 974,498
9,100 Pohang Iron & Steel Company, Ltd. 946,488
23,757 Samsung Electronics Company, Ltd. 6,401,212
25,400 Samsung Securities Company, Ltd. (NON) 1,018,450
540 Shinsegae Company, Ltd. 85,062
72,450 SK Telecom Company, Ltd. ADR 1,782,270
-------------
17,503,554
Taiwan (3.8%)
- -------------------------------------------------------------------------------------------------------------------
70,898 ASE Test, Ltd. (NON) 1,106,718
174,500 Asustek Computer, Inc. 777,927
643,000 Compal Electronics, Inc. 858,117
261,656 Hon Hai Precision Industry 1,218,813
467,962 Taiwan Semiconductor Manufacturing Co. (NON) 1,270,437
1,340,400 United Microelectronics Corp. (NON) 2,030,155
-------------
7,262,167
Thailand (0.5%)
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940,000 Advanced Info Service PLC 1,015,631
374,842 Telecomasia (NON) 1
--------------
1,015,632
--------------
Total Common Stocks (cost $187,880,304) $ 187,881,420
UNITS (1.2%) (a)
NUMBER OF UNITS VALUE
- -------------------------------------------------------------------------------------------------------------------
130,494 HDFC Bank, Ltd. Structured Call Warrants (Issued by UBS AG),
expiration 3/13/03 (India) $ 629,708
22,523 Infosys Technologies, Ltd. 144A Structured Call Warrants
(Issued by UBS AG), expiration 7/16/02 (India) 1,729,991
--------------
Total Units (cost $2,430,489) $ 2,359,699
PURCHASED OPTIONS OUTSTANDING (0.5%) (a) (cost $729,392) EXPIRATION
CONTRACT AMOUNT DATE VALUE
- -------------------------------------------------------------------------------------------------------------------
186 Fuji Television Network, Inc. OTC Option
(Merill Lynch Capital) (Call) Dec. 02 $ 966,229
SHORT-TERM INVESTMENTS (1.0%) (a)
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
$ 23,692 Short-term investments held as collateral for loaned securities
with yields ranging from 1.80% to 2.19% and due dates ranging
from April 1, 2002 to May 13, 2002 (d) $ 23,670
1,856,000 Interest in $715,000,000 joint tri-party repurchase agreement
dated March 28, 2002 with Goldman Sachs & Co. due April 1, 2002
with respect to various U.S. Government obligations --
maturity value of $1,856,396 for an effective yield of 1.92% 1,856,000
--------------
Total Short-Term Investments (cost $1,879,670) $ 1,879,670
- -------------------------------------------------------------------------------------------------------------------
Total Investments (cost $192,919,855) (b) $ 193,087,018
- -------------------------------------------------------------------------------------------------------------------
(a) Percentages indicated are based on net assets of $192,343,688.
(b) The aggregate identified cost on a tax basis is $201,352,819,
resulting in gross unrealized appreciation and depreciation of
$15,851,518 and $24,117,319, respectively, or net unrealized
depreciation of $8,265,801.
(d) See footnote 1 to the financial statements.
(NON) Non-income-producing security.
ADR or GDR after the name of a foreign holding stands for American
Depositary Receipts or Global Depositary Receipts, respectively,
representing ownership of foreign securities on deposit with a
custodian bank.
The accompanying notes are an integral part of these financial statements.
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2002 (Unaudited)
Assets
- -------------------------------------------------------------------------------------------
Investments in securities, at value, including $22,595 of securities on loan
(identified cost $192,919,855) (Note 1) $193,087,018
- -------------------------------------------------------------------------------------------
Cash 68,652
- -------------------------------------------------------------------------------------------
Foreign currency (cost $2,493,327) 2,446,076
- -------------------------------------------------------------------------------------------
Dividends, interest and other receivables 254,965
- -------------------------------------------------------------------------------------------
Receivable for shares of the fund sold 258,243
- -------------------------------------------------------------------------------------------
Receivable for securities sold 920,805
- -------------------------------------------------------------------------------------------
Total assets 197,035,759
Liabilities
- -------------------------------------------------------------------------------------------
Distributions payable to shareholders 731
- -------------------------------------------------------------------------------------------
Payable for securities purchased 2,249,323
- -------------------------------------------------------------------------------------------
Payable for shares of the fund repurchased 1,510,778
- -------------------------------------------------------------------------------------------
Payable for compensation of Manager (Note 2) 372,703
- -------------------------------------------------------------------------------------------
Payable for investor servicing and custodian fees (Note 2) 143,274
- -------------------------------------------------------------------------------------------
Payable for compensation of Trustees (Note 2) 53,875
- -------------------------------------------------------------------------------------------
Payable for administrative services (Note 2) 2,408
- -------------------------------------------------------------------------------------------
Payable for distribution fees (Note 2) 136,645
- -------------------------------------------------------------------------------------------
Collateral on securities loaned, at value (Note 1) 23,670
- -------------------------------------------------------------------------------------------
Other accrued expenses 198,664
- -------------------------------------------------------------------------------------------
Total liabilities 4,692,071
- -------------------------------------------------------------------------------------------
Net assets $192,343,688
Represented by
- -------------------------------------------------------------------------------------------
Paid-in capital (Notes 1 and 4) $352,098,207
- -------------------------------------------------------------------------------------------
Accumulated net investment loss (Note 1) (2,174,410)
- -------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency
transactions (Note 1) (157,486,115)
- -------------------------------------------------------------------------------------------
Net unrealized depreciation of investments and assets and liabilities in
foreign currencies (93,994)
- -------------------------------------------------------------------------------------------
Total -- Representing net assets applicable to
capital shares outstanding $192,343,688
Computation of net asset value and offering price
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class A share
($107,168,316 divided by 12,228,702 shares) $8.76
- -------------------------------------------------------------------------------------------
Offering price per class A share (100/94.25 of $8.76)* $9.29
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class B share
($76,632,939 divided by 9,085,659 shares)** $8.43
- -------------------------------------------------------------------------------------------
Net asset value and offering price per class C share
($2,573,626 divided by 299,809 shares)** $8.58
- -------------------------------------------------------------------------------------------
Net asset value and redemption price per class M share
($5,968,807 divided by 696,475 shares) $8.57
- -------------------------------------------------------------------------------------------
Offering price per class M share (100/96.50 of $8.57)* $8.88
- -------------------------------------------------------------------------------------------
* On single retail sales of less than $50,000. On sales of $50,000
or more and on group sales, the offering price is reduced.
** Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
The accompanying notes are an integral part of these financial statements.
STATEMENT OF OPERATIONS
Six months ended March 31, 2002 (Unaudited)
Investment income:
- -------------------------------------------------------------------------------------------
Dividend (net of foreign tax of $85,668) $ 888,528
- -------------------------------------------------------------------------------------------
Interest 47,116
- -------------------------------------------------------------------------------------------
Securities lending 18,544
- -------------------------------------------------------------------------------------------
Total investment income 954,188
- -------------------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------------------
Compensation of Manager (Note 2) 786,864
- -------------------------------------------------------------------------------------------
Investor servicing and custodian fees (Note 2) 317,280
- -------------------------------------------------------------------------------------------
Compensation of Trustees (Note 2) 20,832
- -------------------------------------------------------------------------------------------
Administrative services (Note 2) 4,888
- -------------------------------------------------------------------------------------------
Distribution fees -- Class A (Note 2) 137,053
- -------------------------------------------------------------------------------------------
Distribution fees -- Class B (Note 2) 395,168
- -------------------------------------------------------------------------------------------
Distribution fees -- Class C (Note 2) 13,935
- -------------------------------------------------------------------------------------------
Distribution fees -- Class M (Note 2) 19,803
- -------------------------------------------------------------------------------------------
Reports to shareholders 100,743
- -------------------------------------------------------------------------------------------
Postage 100,324
- -------------------------------------------------------------------------------------------
Other 49,043
- -------------------------------------------------------------------------------------------
Total expenses 1,945,933
- -------------------------------------------------------------------------------------------
Expense reduction (Note 2) (131,858)
- -------------------------------------------------------------------------------------------
Net expenses 1,814,075
- -------------------------------------------------------------------------------------------
Net investment loss (859,887)
- -------------------------------------------------------------------------------------------
Net realized loss on investments (Notes 1 and 3) (12,525,156)
- -------------------------------------------------------------------------------------------
Net realized gain on futures contracts (Notes 1 and 3) 525,114
- -------------------------------------------------------------------------------------------
Net realized gain on foreign currency transactions (Note 1) 83,942
- -------------------------------------------------------------------------------------------
Net realized gain on swap contracts (Note 1) 80,350
- -------------------------------------------------------------------------------------------
Net unrealized depreciation of assets and liabilities in foreign currencies
during the period (54,690)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investments and futures contracts during the
period 39,860,445
- -------------------------------------------------------------------------------------------
Net gain on investments 27,970,005
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 27,110,118
- -------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
STATEMENT OF CHANGES IN NET ASSETS
Six months ended Year ended
March 31 September 30
2002* 2001
- --------------------------------------------------------------------------------------------------
Decrease in net assets
- --------------------------------------------------------------------------------------------------
Operations:
- --------------------------------------------------------------------------------------------------
Net investment loss $ (859,887) $ (1,440,611)
- --------------------------------------------------------------------------------------------------
Net realized loss on investments and foreign currency transactions (11,835,750) (31,818,140)
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
and assets and liabilities in foreign currencies 39,805,755 (108,119,204)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 27,110,118 (141,377,955)
- --------------------------------------------------------------------------------------------------
Decrease from capital share transactions (Note 4) (33,576,662) (93,516,815)
- --------------------------------------------------------------------------------------------------
Total decrease in net assets (6,466,544) (234,894,770)
Net assets
- --------------------------------------------------------------------------------------------------
Beginning of period 198,810,232 433,705,002
- --------------------------------------------------------------------------------------------------
End of period (including accumulated
net investment loss of $2,174,410
and $1,314,523, respectively) $192,343,688 $198,810,232
- --------------------------------------------------------------------------------------------------
*Unaudited
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- ------------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.68 $12.91 $13.49 $8.83 $13.58 $13.63
- ------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.02) (.01) (.08) (.01) .11 .05
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.10 (5.22) (.37) 5.79 (4.77) .41
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.08 (5.23) (.45) 5.78 (4.66) .46
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.13) (1.11) (.09) (.43)
- ------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- (.01) -- (.08)
- ------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.13) (1.12) (.09) (.51)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.76 $7.68 $12.91 $13.49 $8.83 $13.58
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 14.06* (40.51) (3.54) 71.79 (34.47) 3.47
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $107,168 $112,772 $232,355 $248,255 $240,978 $515,107
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) .83* 1.58 1.38 1.46 1.46 1.50
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.27)* (.15) (.49) (.14) 1.05 .40
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.78* 120.35 150.42 183.18 128.25 89.77
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- ------------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.43 $12.59 $13.20 $8.68 $13.34 $13.41
- ------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.05) (.09) (.19) (.10) .03 (.06)
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.05 (5.07) (.36) 5.70 (4.69) .41
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.00 (5.16) (.55) 5.60 (4.66) .35
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.06) (1.07) -- (.36)
- ------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- (.01) -- (.06)
- ------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.06) (1.08) -- (.42)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.43 $7.43 $12.59 $13.20 $8.68 $13.34
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 13.46* (40.99) (4.27) 70.58 (34.93) 2.66
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $76,633 $78,452 $179,385 $221,291 $100,331 $199,036
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.20* 2.33 2.13 2.21 2.21 2.25
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.65)* (.89) (1.25) (.91) .32 (.45)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.78* 120.35 150.42 183.18 128.25 89.77
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS C
- ----------------------------------------------------------------------------------------
Six months
ended For the period
Per-share March 31 July 26, 1999+
operating performance (Unaudited) Year ended September 30 to Sept. 30
- ----------------------------------------------------------------------------------------
2002 2001 2000 1999
- ----------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.56 $12.82 $13.48 $12.15
- ----------------------------------------------------------------------------------------
Investment operations
- ----------------------------------------------------------------------------------------
Net investment loss (a) (.05) (.10) (.17) (.02)
- ----------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.07 (5.16) (.38) 1.35
- ----------------------------------------------------------------------------------------
Total from
investment operations 1.02 (5.26) (.55) 1.33
- ----------------------------------------------------------------------------------------
Less distributions:
- ----------------------------------------------------------------------------------------
From net
investment income -- -- (.11) --
- ----------------------------------------------------------------------------------------
Total distributions -- -- (.11) --
- ----------------------------------------------------------------------------------------
Net asset value,
end of period $8.58 $7.56 $12.82 $13.48
- ----------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 13.49* (41.03) (4.24) 10.95*
- ----------------------------------------------------------------------------------------
Ratios and supplemental data
- ----------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $2,574 $2,860 $11,040 $2,308
- ----------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.20* 2.33 2.13 .41*
- ----------------------------------------------------------------------------------------
Ratio of net investment loss
to average net assets (%) (.66)* (.98) (1.07) (.19)*
- ----------------------------------------------------------------------------------------
Portfolio turnover (%) 33.78* 120.35 150.42 183.18
- ----------------------------------------------------------------------------------------
+ Commencement of operations.
* Not annualized.
(a) Per share net investment loss has been determined on the basis of
the weighted average number of shares outstanding during the period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
The accompanying notes are an integral part of these financial statements.
FINANCIAL HIGHLIGHTS
(For a common share outstanding throughout the period)
CLASS M
- ------------------------------------------------------------------------------------------------------------------
Six months
ended
Per-share March 31
operating performance (Unaudited) Year ended September 30
- ------------------------------------------------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $7.54 $12.75 $13.35 $8.78 $13.46 $13.54
- ------------------------------------------------------------------------------------------------------------------
Investment operations
- ------------------------------------------------------------------------------------------------------------------
Net investment income (loss)(a) (.04) (.07) (.16) (.08) .06 (.02)
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 1.07 (5.14) (.36) 5.76 (4.74) .41
- ------------------------------------------------------------------------------------------------------------------
Total from
investment operations 1.03 (5.21) (.52) 5.68 (4.68) .39
- ------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------
From net
investment income -- -- (.08) (1.10) --(d) (.40)
- ------------------------------------------------------------------------------------------------------------------
In excess of net
investment income -- -- -- (.01) -- (.07)
- ------------------------------------------------------------------------------------------------------------------
Total distributions -- -- (.08) (1.11) -- (.47)
- ------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $8.57 $7.54 $12.75 $13.35 $8.78 $13.46
- ------------------------------------------------------------------------------------------------------------------
Total return at
net asset value (%)(b) 13.66* (40.86) (4.01) 70.88 (34.75) 2.93
- ------------------------------------------------------------------------------------------------------------------
Ratios and supplemental data
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $5,969 $4,727 $10,925 $14,500 $5,488 $10,304
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets (%)(c) 1.08* 2.08 1.88 1.96 1.96 2.00
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (%) (.50)* (.66) (1.05) (.69) .57 (.17)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover (%) 33.78* 120.35 150.42 183.18 128.25 89.77
- ------------------------------------------------------------------------------------------------------------------
* Not annualized.
(a) Per share net investment income (loss) has been determined on the
basis of the weighted average number of shares outstanding during the
period.
(b) Total return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(c) Includes amounts paid through expense offset arrangements and
brokerage service arrangements (Note 2).
(d) Amount represents less than $0.01 per share.
The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 2002 (Unaudited)
Note 1
Significant accounting policies
Putnam Asia Pacific Growth Fund (the "fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The fund seeks capital appreciation by
investing primarily in common stocks and other securities of companies
located in Asia and in the Pacific Basin.
The fund offers class A, class B, class C and class M shares. Class A
shares are sold with a maximum front-end sales charge of 5.75%. Class B
shares, which convert to class A shares after approximately eight years,
do not pay a front-end sales charge but pay a higher ongoing
distribution fee than class A shares, and are subject to a contingent
deferred sales charge, if those shares are redeemed within six years of
purchase. Class C shares are subject to the same fees and expenses as
class B shares, except that class C shares have a one-year 1.00%
contingent deferred sales charge and do not convert to class A shares.
Class M shares are sold with a maximum front end sales charge of 3.50%
and pay an ongoing distribution fee that is higher than class A shares
but lower than class B and class C shares. A redemption fee of 1.00% of
the total redemption amount may apply to any shares purchased after
March 15, 2001 that are held for less than 90 days.
Expenses of the fund are borne pro-rata by the holders of both classes of
shares, except that each class bears expenses unique to that class
(including the distribution fees applicable to such class). Each class
votes as a class only with respect to its own distribution plan or other
matters on which a class vote is required by law or determined by the
Trustees. Shares of each class would receive their pro-rata share of the
net assets of the fund, if the fund were liquidated. In addition, the
Trustees declare separate dividends on each class of shares.
The following is a summary of significant accounting policies
consistently followed by the fund in the preparation of its financial
statements. The preparation of financial statements is in conformity
with accounting principles generally accepted in the United States of
America and requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities in the financial
statements and the reported amounts of increases and decreases in net
assets from operations during the reporting period. Actual results could
differ from those estimates.
A) Security valuation Investments for which market quotations are
readily available are stated at market value, which is determined using
the last reported sales price on its principal exchange, or if no sales
are reported -- as in the case of some securities traded
over-the-counter -- the last reported bid price. Securities quoted in
foreign currencies are translated into U.S. dollars at the current
exchange rate. Short-term investments having remaining maturities of 60
days or less are stated at amortized cost, which approximates market
value. Other investments, including restricted securities, are stated at
fair value following procedures approved by the Trustees.
B) Joint trading account The fund may transfer uninvested cash balances,
including cash collateral received under security lending arrangements,
into a joint trading account along with the cash of other registered
investment companies and certain other accounts managed by Putnam
Investment Management, LLC ("Putnam Management"), the fund's manager, an
indirect wholly-owned subsidiary of Putnam, LLC. These balances may be
invested in one or more repurchase agreements and/or short-term money
market instruments.
C) Repurchase agreements The fund, or any joint trading account, through
its custodian, receives delivery of the underlying securities, the
market value of which at the time of purchase is required to be in an
amount at least equal to the resale price, including accrued interest.
Collateral for certain tri-party repurchase agreements is held at the
counterparty's custodian in a segregated account for the benefit of the
fund and the counterparty. Putnam Management is responsible for
determining that the value of these underlying securities is at all
times at least equal to the resale price, including accrued interest.
D) Security transactions and related investment income Security
transactions are accounted for on the trade date (date the order to buy
or sell is executed). Gains or losses on securities sold are determined
on the identified cost basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from
foreign securities are recorded as soon as the fund is informed of the
ex-dividend date. Non-cash dividends, if any, are recorded at the fair
market value of the securities received.
E) Foreign currency translation The accounting records of the fund are
maintained in U.S. dollars. The market value of foreign securities,
currency holdings, and other assets and liabilities are recorded in the
books and records of the fund after translation to U.S. dollars based on
the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when accrued or incurred. The
fund does not isolate that portion of realized or unrealized gains or
losses resulting from changes in the foreign exchange rate on
investments from fluctuations arising from changes in the market prices
of the securities. Such gains and losses are included with the net
realized and unrealized gain or loss on investments. Net realized gains
and losses on foreign currency transactions represent net realized
exchange gains or losses on closed forward currency contracts,
disposition of foreign currencies and the difference between the amount
of investment income and foreign withholding taxes recorded on the
fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net unrealized appreciation and depreciation of assets and
liabilities in foreign currencies arise from changes in the value of
open forward currency contracts and assets and liabilities other than
investments at the period end, resulting from changes in the exchange
rate. Investments in foreign securities involve certain risks, including
those related to economic instability, unfavorable political
developments, and currency fluctuations, not present with domestic
investments.
F) Forward currency contracts The fund may engage in forward currency
contracts, which are agreements between two parties to buy and sell
currencies at a set price on a future date. These contracts are used to
protect against a decline in value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or quoted
(or an increase in the value of a currency in which securities a fund
intends to buy are denominated, when a fund holds cash reserves and
short-term investments). The U.S. dollar value of forward currency
contracts is determined using current forward currency exchange rates
supplied by a quotation service. The market value of the contract will
fluctuate with changes in currency exchange rates. The contract is
"marked to market" daily and the change in market value is recorded as
an unrealized gain or loss. When the contract is closed, the fund
records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed. The fund could be exposed to risk if the value of
the currency changes unfavorably, if the counterparties to the contracts
are unable to meet the terms of their contracts or if the fund is unable
to enter into a closing position.
G) Futures and options contracts The fund may use futures and options
contracts to hedge against changes in the values of securities the fund
owns or expects to purchase. The fund may also write options on
securities it owns or in which it may invest to increase its current
returns.
The potential risk to the fund is that the change in value of futures
and options contracts may not correspond to the change in value of the
hedged instruments. In addition, losses may arise from changes in the
value of the underlying instruments, if there is an illiquid secondary
market for the contracts, or if the counterparty to the contract is
unable to perform. When the contract is closed, the fund records a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed. Realized gains and losses on purchased options are included in
realized gains and losses on investment securities.
Futures contracts are valued at the quoted daily settlement prices
established by the exchange on which they trade. The Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the futures contract. Such receipts or
payments are known as "variation margin". Exchange traded options are
valued at the last sale price, or if no sales are reported, the last bid
price for purchased options and the last ask price for written options.
Options traded over-the-counter are valued using prices supplied by
dealers.
H) Equity swap contracts The fund may engage in equity swap agreements,
which are arrangements to exchange the return generated by one
instrument for the return generated by another instrument. To manage its
exposure to equity markets the fund may enter into equity swap
agreements, which involve a commitment by one party to pay interest in
exchange for a market-linked return based on a notional principal
amount. To the extent that the total return of the security or index
underlying the transaction exceeds or falls short of the offsetting
interest rate obligation, the fund will receive a payment from or make a
payment to the counterparty, respectively. Equity swaps are marked to
market daily based upon quotations from market makers and the change, if
any, is recorded as unrealized gain or loss. Payments received or made
at the end of the measurement period are recorded as realized gains or
losses. The fund could be exposed to credit or market risk due to
unfavorable changes in the fluctuation of interest rates or in the price
of the underlying security or index, the possibility that there is no
liquid market for these agreements or that the counterparty may default
on its obligation to perform.
I) Security lending The fund may lend securities, through its agent
Citibank N.A., to qualified borrowers in order to earn additional
income. The loans are collateralized by cash and/or securities in an
amount at least equal to the market value of the securities loaned. The
market value of securities loaned is determined daily and any additional
required collateral is allocated to the fund on the next business day.
The risk of borrower default will be borne by Citibank N.A., the fund
will bear the risk of loss with respect to the investment of the cash
collateral. Income from securities lending is included in investment
income on the Statement of operations. At March 31, 2002, the value of
securities loaned amounted to $22,595. The fund received cash collateral
of $23,670, which is pooled with collateral of other Putnam funds into
35 issuers of high-grade short-term investments.
J) Line of credit The fund has entered into a committed line of credit
with certain banks. This line of credit agreement includes restrictions
that the fund maintains an asset coverage ratio of at least 300% and
borrowings must not exceed prospectus limitations. For the six months
ended March 31, 2002, the fund had no borrowings against the line of
credit.
K) Federal taxes It is the policy of the fund to distribute all of its
taxable income within the prescribed time and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. It is also the intention of the fund to distribute
an amount sufficient to avoid imposition of any excise tax under Section
4982 of the Internal Revenue Code of 1986, as amended. Therefore, no
provision has been made for federal taxes on income, capital gains or
unrealized appreciation on securities held nor for excise tax on income
and capital gains.
At September 30, 2001, the fund had a capital loss carryover of
approximately $103,812,000 available to the extent allowed by tax law to
offset future capital gains, if any. The amount of the carryover and the
expiration dates are:
Loss Carryover Expiration
- -------------- ------------------
$101,321,000 September 30, 2007
2,491,000 September 30, 2009
L) Distributions to shareholders Distributions to shareholders from net
investment income are recorded by the fund on the ex-dividend date.
Distributions from capital gains, if any, are recorded on the
ex-dividend date and paid at least annually. The amount and character of
income and gains to be distributed are determined in accordance with
income tax regulations, which may differ from generally accepted
accounting principles. Reclassifications are made to the fund's capital
accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations.
Note 2
Management fee, administrative
services and other transactions
Compensation of Putnam Management, for management and investment
advisory services is paid quarterly based on the average net assets of
the fund. Such fee is based on the following annual rates: 0.80% of the
first $500 million of average net assets, 0.70% of the next $500
million, 0.65% of the next $500 million, 0.60% of the next $5 billion,
0.575% of the next $5 billion, 0.555% of the next $5 billion, 0.54% of
the next $5 billion and 0.53% thereafter.
The fund reimburses Putnam Management an allocated amount for the
compensation and related expenses of certain officers of the fund and
their staff who provide administrative services to the fund. The
aggregate amount of all such reimbursements is determined annually by
the Trustees.
Custodial functions for the fund's assets are provided by Putnam
Fiduciary Trust Company (PFTC), a wholly-owned subsidiary of Putnam,
LLC. Investor servicing agent functions are provided by Putnam Investor
Services, a division of PFTC.
The fund has entered into an arrangement with PFTC whereby credits
realized as a result of uninvested cash balances are used to reduce a
portion of the fund's expenses. The fund also reduced expenses through
brokerage service arrangements. For the six months ended March 31, 2002,
the fund's expenses were reduced by $131,858 under these arrangements.
Each independent Trustee of the fund receives an annual Trustee fee, of
which $764 has been allocated to the fund, and an additional fee for
each Trustees meeting attended. Trustees receive additional fees for
attendance at certain committee meetings.
The fund has adopted a Trustee Fee Deferral Plan (the "Deferral Plan")
which allows the Trustees to defer the receipt of all or a portion of
Trustees Fees payable on or after July 1, 1995. The deferred fees remain
invested in certain Putnam funds until distribution in accordance with
the Deferral Plan.
The fund has adopted an unfunded noncontributory defined benefit pension
plan (the "Pension Plan") covering all Trustees of the fund who have
served as a Trustee for at least five years. Benefits under the Pension
Plan are equal to 50% of the Trustee's average total retainer and
meeting fees for the three years preceding retirement. Pension expense
for the fund is included in Compensation of Trustees in the Statement of
operations. Accrued pension liability is included in Payable for
compensation of Trustees in the Statement of assets and liabilities.
The fund has adopted distribution plans (the "Plans") with respect to
its class A, class B, class C and class M shares pursuant to Rule 12b-1
under the Investment Company Act of 1940. The purpose of the Plans is to
compensate Putnam Retail Management, a wholly-owned subsidiary of
Putnam, LLC and Putnam Retail Management GP, Inc., for services provided
and expenses incurred by it in distributing shares of the fund. The
Plans provide for payments by the fund to Putnam Retail Management at an
annual rate up to 0.35%, 1.00%, 1.00% and 1.00% of the average net
assets attributable to class A, class B, class C and class M shares,
respectively. The Trustees have approved payment by the fund at an
annual rate of 0.25%, 1.00%, 1.00% and 0.75% of the average net assets
attributable to class A, class B, class C and class M shares,
respectively.
For the six months ended March 31, 2002, Putnam Retail Management,
acting as underwriter received net commissions of $8,258 and $230 from
the sale of class A and class M shares, respectively, and received
$80,971 and $1,666 in contingent deferred sales charges from redemptions
of class B and class C shares, respectively. A deferred sales charge of
up to 1.00% and 0.65% is assessed on certain redemptions of class A and
class M shares, respectively. For the six months ended March 31, 2002,
Putnam Retail Management, acting as underwriter received $28,192 and no
monies on class A and class M redemptions, respectively.
Note 3
Purchases and sales of securities
During the six months ended March 31, 2002, cost of purchases and
proceeds from sales of investment securities other than short-term
investments aggregated $64,618,559 and $82,086,337, respectively. There
were no purchases and sales of U.S. government obligations.
Note 4
Capital shares
At March 31, 2002, there was an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 11,034,585 $ 90,627,314
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
11,034,585 90,627,314
Shares repurchased (13,485,556) (112,342,496)
- ---------------------------------------------------------------------------
Net decrease (2,450,971) $ (21,715,182)
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class A Shares Amount
- ---------------------------------------------------------------------------
Shares sold 54,420,205 $ 584,987,948
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
54,420,205 584,987,948
Shares repurchased (57,734,377) (633,297,367)
- ---------------------------------------------------------------------------
Net decrease (3,314,172) $ (48,309,419)
- ---------------------------------------------------------------------------
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 380,319 $ 3,061,825
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
380,319 3,061,825
Shares repurchased (1,853,481) (14,881,295)
- ---------------------------------------------------------------------------
Net decrease (1,473,162) $(11,819,470)
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class B Shares Amount
- ---------------------------------------------------------------------------
Shares sold 2,506,589 $ 26,421,911
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
2,506,589 26,421,911
Shares repurchased (6,191,603) (63,929,172)
- ---------------------------------------------------------------------------
Net decrease (3,685,014) $(37,507,261)
- ---------------------------------------------------------------------------
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 256,148 $ 2,091,334
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
256,148 2,091,334
Shares repurchased (334,473) (2,767,248)
- ---------------------------------------------------------------------------
Net decrease (78,325) $ (675,914)
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class C Shares Amount
- ---------------------------------------------------------------------------
Shares sold 2,876,122 $ 31,136,424
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
2,876,122 31,136,424
Shares repurchased (3,359,066) (36,033,428)
- ---------------------------------------------------------------------------
Net decrease (482,944) $ (4,897,004)
- ---------------------------------------------------------------------------
Six months ended March 31, 2002
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 269,802 $ 2,318,672
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
268,802 2,318,672
Shares repurchased (200,252) (1,684,768)
- ---------------------------------------------------------------------------
Net increase 69,550 $ 633,904
- ---------------------------------------------------------------------------
Year ended September 30, 2001
- ---------------------------------------------------------------------------
Class M Shares Amount
- ---------------------------------------------------------------------------
Shares sold 2,904,584 $ 32,049,146
- ---------------------------------------------------------------------------
Shares issued in connection
with reinvestment
of distributions -- --
- ---------------------------------------------------------------------------
2,904,584 32,049,146
Shares repurchased (3,134,356) (34,852,277)
- ---------------------------------------------------------------------------
Net decrease (229,772) $ (2,803,131)
- ---------------------------------------------------------------------------
Note 5
Actions by Trustees
In April 2002, the Trustees approved the merger of Putnam Asia Pacific
Fund into Putnam International Growth Fund. The transaction is currently
scheduled to occur in August 2002. It is subject to a number of
conditions and there is no guarantee it will occur.
FUND INFORMATION
ABOUT PUTNAM INVESTMENTS
One of the largest mutual fund families in the United States, Putnam
Investments has a heritage of investment leadership dating back to Judge
Samuel Putnam, whose Prudent Man Rule has defined fiduciary tradition and
practice since 1830. Founded 65 years ago, Putnam Investments was built
around the concept that a balance between risk and reward is the hallmark
of a well-rounded financial program. We presently manage over 100 mutual
funds in growth, value, blend, fixed income, and international.
INVESTMENT MANAGER
Putnam Investment Management, LLC
One Post Office Square
Boston, MA 02109
MARKETING SERVICES
Putnam Retail Management
One Post Office Square
Boston, MA 02109
CUSTODIAN
Putnam Fiduciary Trust Company
LEGAL COUNSEL
Ropes & Gray
TRUSTEES
John A. Hill, Chairman
Jameson Adkins Baxter
Charles B. Curtis
Ronald J. Jackson
Paul L. Joskow
Elizabeth T. Kennan
Lawrence J. Lasser
John H. Mullin III
Robert E. Patterson
George Putnam, III
A.J.C. Smith
W. Thomas Stephens
W. Nicholas Thorndike
OFFICERS
George Putnam, III
President
Charles E. Porter
Executive Vice President and Treasurer
Patricia C. Flaherty
Senior Vice President
Lawrence J. Lasser
Vice President
Gordon H. Silver
Vice President
Ian C. Ferguson
Vice President
Brett C. Browchuk
Vice President
Stephen Oristaglio
Vice President
Justin Scott
Vice President
Richard G. Leibovitch
Vice President
Richard A. Monaghan
Vice President
Michael T. Healy
Vice President
John R. Verani
Vice President
This report is for the information of shareholders of Putnam Asia
Pacific Growth Fund. It may also be used as sales literature when
preceded or accompanied by the current prospectus, which gives details
of sales charges, investment objectives, and operating policies of the
fund, and the most recent copy of Putnam's Quarterly Performance Summary
and Putnam's Quarterly Ranking Summary. For more information or to
request a prospectus, call toll free: 1-800-225-1581. The fund's
Statement of Additional Information contains additional information
about the fund's Trustees and is available without charge upon request
by calling 1-800-225-1581.
Visit www.putnaminvestments.com or call a representative at 1-800-225-1581.
NOT FDIC INSURED, MAY LOSE VALUE, NO BANK GUARANTEE
[LOGO OMITTED]
PUTNAM INVESTMENTS
The Putnam Funds
One Post Office Square
Boston, Massachusetts 02109
- ---------------------
PRSRT STD
U.S. POSTAGE PAID
PUTNAM
INVESTMENTS
- ---------------------
For account balances, economic forecasts, and the latest on Putnam funds, visit
www.putnaminvestments.com
SA001-79275 844/193/470 5/02